If the theory of purchasing power parity is correct, which of the following statements should be true in the long run?
A) The percentage change in the nominal exchange rate equals the foreign inflation rate minus the domestic inflation rate.
B) The percentage change in the real exchange rate equals the foreign inflation rate plus the domestic inflation rate.
C) The percentage change in the nominal exchange rate equals the percentage change in the real exchange rate minus the sum of the foreign inflation rate and the domestic inflation rate.
D) The percentage change in the nominal exchange rate equals zero.
A
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Technological advances that allow a good to be produced at a lower cost will shift the demand curve rightward.
Answer the following statement true (T) or false (F)
In an attempt to manage expectations, a central bank may prefer to announce an unconditional commitment, because an unconditional commitment ________ than a conditional commitment
A) is inherently more credible B) may have an impact on expectations that is stronger C) places fewer constraints on policy makers D) is less likely to have unintended consequences
A closed shop is one in which
A) a union is prohibited. B) some members belong to the union while others do not. C) belonging to a union is a condition of employment. D) the union is a co-manager of the day-to-day operations of the firm.
Since the year 1959, the poverty rate has
A. increased very slightly. B. increased significantly. C. decreased significantly. D. remained almost unchanged.